The domestic fertilizers output remained slippery. The core sector index for Fertilizers stood at 135.02 in January 2024, down marginally by 0.56% compared to same month last year. The index slipped by 1.79% on a monthly basis. With the rabi season harvesting getting underway and still few months left for the start of the kharif planting season, the demand for fertilizers is likely to be muted in near term. Meanwhile, global fertilizer prices remain on an upward trajectory. The Green Markets Weekly North America Fertilizer Price Index stood at 599.22 for the week ending March 1, 2024. This is the highest level for the index in last one year. The prices have gone up by 10% over last two months.

Cabinet Approves Nutrient Based Subsidy (NBS) Rates ForKharif Season-2024

The Union Cabinet approved the proposal of the Department of Fertilizers for fixing the Nutrient Based Subsidy (NBS) rates for KHARIF Season, 2024 (from 01.04.2024 to 30.09.2024) on Phosphatic and Potassic (P&K) fertilizers and inclusion of 3 new fertilizer grades under NBS scheme. The tentative budgetary requirement for Kharif season 2024 would be approximately Rs.24,420crore.

The subsidy on P&K fertilizers will be provided based on approved rates for Kharif 2024 (applicable from 01.04.2024 to 30.09.2024) to ensure smooth availability of these fertilizers to the farmers at affordable prices.

Government is making available 25 grades of P&K fertilizers to farmers at subsidized prices through fertilizer manufacturers/importers. The subsidy on P&K fertilizers is governed by NBS Scheme w.e.f 01.04.2010. In accordance with its farmer friendly approach, the Government is committed to ensure the availability of P&K fertilizers to the farmers at affordable prices.

In view of the recent trends in the international prices of fertilizers & inputs i.e. Urea, DAP, MOP and Sulphur, Government has decided to approve the NBS rates for Kharif 2024 effective from 01.04.24 to 30.09.24 on Phosphatic and Potassic (P&K) fertilizers. Government has also decided to include 3 new Fertilizer grades under the NBS scheme. The subsidy would be provided to the fertilizer companies as per approved and notified rates so that fertilizers are made available to farmers at affordable prices.

India will replace the consumption of 2.5 million tonnes (mt) of conventional urea with nano urea in FY24, union chemicals and fertilisers minister MansukhMandaviya said at a press conference on Friday. This is in line with India’s goal of achieving self-sufficiency in urea production by 2025. India's urea consumption in the 10 months to February 2024 stood at 31.7 mt, down from 35.7 mt in the same period of the previous fiscal year, the minister said. In February and March of FY24, we are expecting urea consumption to be no more than 1 mt on average, which will translate to a total of 32.7 mt of urea consumed in FY24," Mandaviya said.

Outlook:

India’s fertilizersubsidies are falling. In FY23, the government had spent about Rs2.55 lakh crorea record high, on fertiliser subsidies during that fiscal. The scenario is set to alter this fiscal though. Finance minister NirmalaSitharaman, in her latest interim budget speech said the government would reduce the allocation for fertiliser subsidies by 13% to Rs1.64 trillion in FY25 from the revised budget estimate of Rs1.89 lakh crore for FY24. The original allocation for fertiliser subsidies for FY24 was Rs1.75 trillion. However, even at 1.89 lakh crore, the overall subsidy burden is down around 14% compared to FY23. The wholesale price index for Manufacture of fertilizers and nitrogen compounds stood at 141.30 in January 2024, down 4.14% on year and falling to the lowest level in last four months.